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EPSON’s Asia Strategy

Updated on October 13, 2012

This week I went to see Adelaide United play Gamba Osaka in the Asian Champions League soccer match. During the pre-game warm up my eye went towards the advertising banners (which are different than at normal A-League games) and saw signs for Q-Tel, Qatar Oil, Toyota and EPSON. As the Asian League games are played from Australia through to Japan, across Asia and through to Uzbekistan, including the Gulf States I can understand why a regional telco, oil producer and a multinational car manufacturer sponsor the game, but why EPSON? This led me to do a little bit of research to understand why Asia is important to EPSON and what their regional strategy is.

Who is EPSON?

Seiko Epson Corporation, commonly known as EPSON is a Japanese technology company that is known around the world for their printers and imaging equipment. Consumables for these products make up a large majority of the profit. EPSON is a significant business unit within a Group that includes the world famous Seiko watch business.

During 2010 EPSON generated USD$10.6 Billion in revenue for the Group and employs 79,000 people across the globe.

In the segments that EPSON services they are a major player and currently control 22% of global sales.

Adelaide United Fans
Adelaide United Fans
Hindmarsh Stadium, Adelaide
Hindmarsh Stadium, Adelaide

What is EPSON trying to achieve in Asia?

During the past 3 years there has been a slow down in the developed world, in part due to the GFC. There is also reduced demand in the retail sector as people have enough stuff, there is no killer new technology that people want and there is a move back to saving. This is leading to reduced retail demand.

EPSON have seen this affect their result and have released a new strategy that encompasses establishing a profitable business in emerging markets. During the GFC there has been significant growth in emerging markets, including China and India, and EPSON has a focus to drive revenue from these nations.

Part of the strategy over the past four years has been in the printer segment. Activity has included:

  • Launched high capacity ink tank models onto the market (this suits the Asian market as customers may be some distance from a reseller, so getting refills can be inconvenient)
  • Increased the range and upgraded the models
  • Expanded the sales territory and sales model
  • By the end of 2011, 20% of the models sold were high capacity ink tank units

During the next 3 years EPSON hopes to consolidate this result through:

  • Continue to expand the model range in the high capacity ink tank market
  • Development enhancements based upon customer needs

One way that EPSON is executing this is through an innovative sales model for the printer industry. In the developed world printer manufacturers sell the printer unit at cost with a minimal amount of ink included. The profit margin is in the refills and once a customer has selected a brand they are then forced to buy proprietary refills at a large margin. Recently my printer needed some refills that would cost $100 for two cartridges (one colour & one black). But I could buy a new printer for $85, so that threw out my perfectly good printer due to the refill cost.

Switching costs are now reducing due to the price of a printer being about the same as a refill and because the printer manufacturer is making little margin on the product then there is little incentive to innovate.

So, in Asia EPSON has adopted another model. The printer units are priced at a higher level than in the developed world. This has lifted EPSON away from the other competitors to become a premium product. People who buy EPSON now associate the brand with quality and are willing to pay extra. Also combined with more ink in the printer and the reduced need to refill as often is bringing about some additional competitive advantage. This is a new experiment for EPSON, so it will take some time to see if it will work, but the early indications is that it is gaining traction.

Mid field advertising
Mid field advertising

Marketing EPSON in Asia

To support the sales and distribution strategy EPSON is advertising their brand with Asia’s premium sporting competition, the Asian Champions League. This is a very important strategy for the brand.

In the 4Ps one of the key elements is promotion. EPSON does this by having a prominent sign halfway in the pitch and at each goal area. This association with the ACL helps create awareness and recall as well as lifting the EPSON product into the premium and quality category.

Asia is soccer mad and this competition is putting the top club teams in the region against each other. By advertising their brand in this competition EPSON is getting exposure in the emerging Asian nations as well as the Gulf Nations, China and India. It also consolidates EPSON in the developed nations of Australia and Japan.

To further capitalise on this regional soccer arrangement, EPSON recently began sponsorship with Manchester United. If Asia is soccer mad, then they are also ManU mad! There are millions of ManU supporters in Asia and this affinity with EPSON will further concrete the brand as desirable, premium and quality. All of the aspirational attributes of the emerging Asian consumer.

Gameday action
Gameday action
Adelaide fans
Adelaide fans

Is it Working?

EPSON believes that they are on the right strategy in Asia and are predicting a return to $1 Trillion Yen in revenue by 2014. The early indications are also very interesting.

The focus on emerging markets is proving a wise strategy, especially as the developed nations remain in recession. China is developing well and EPSON predicts to have 15% market share in India by the end of the year.

There appears to be a strong link between the emerging markets strategy and the marketing activity with soccer and this combined with innovating new products for the Asian markets appears to be a winner.

The EPSON vision is ‘Working to provide surprise and delight that exceeds our customers’ expectations: Exceed your vision’ is the catch cry of this company as they celebrate 70 years in business and the association with the Asian Champions League seems to be delivering on this promise.

By the way, Adelaide beat Gamba Osaka for the first time 2-0! Cheers Michael

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